Billion-Dollar Industrial Estate Tipped for Sydney Super Site

A massive logistics estate could be created on the banks of the Parramatta River on the back of the sale of one of Sydney’s largest infill industrial sites.

The former Shell oil refinery site in Rosehill Central is tipped to fetch more than $2000 a square metre, or $500 million, before its transformation into a 140,000sq m last-mile logistics hub potentially worth upwards of $1 billion.

The 25ha site on the corner of Devon and Colquhoun streets, neighbours the Rosehill Racecourse and James Ruse Drive as well as Victoria Road and the M4 Motorway.

CBRE’s Jason Edge and Michael O’Neill with Colliers International’s David Hall and Tony Durante have been appointed to market the vacant site.

If realised, the transaction would mark the biggest industrial land deal in Sydney since Qantas sold 14ha Mascot site last year to Logos Property Group.

Hall said the land offered a potential developer a broad range of permitted uses, with the approved 13-lot subdivision allowing for multiple projects ranging in size from 8000sq m to 36,000 square metres.

“This location provides seamless access to the densely populated centres of Sydney,” Hall said.

“There is an opportunity to create the perfect last-mile logistics location and an exceptionally efficient e-commerce location supported by lower inbound and outbound transportation costs, lower toll costs and proximity to population and key logistics infrastructure.” 

Industrial and logistics was by far the hottest sector as investors bought heavily into its e-commerce fuelled growth story, spending $28 billion last year and pushing average yields well below 5 per cent.

Driving up rents is the e-commerce boom, which has fuelled demand for last-mile logistics facilities close to major urban centres while driving down industrial vacancy rates to a record low of 1.3 per cent nationally.

According to CBRE, online shopping is expected to account for 20 per cent of all retail spending in Australia by 2025 after doubling to 15 per cent since the start of the pandemic. 

The Sydney industrial market was one of the most active markets nationally last year, with the surge into the city’s industrial space accounting for $8.2 billion in assets exchanging hands.

Average rents in Sydney have since lifted by 11.9 per cent on an annualised basis over the first quarter of 2022 with minimal new stock expected until 2024.

Sydney’s central west market currently has more than 200,000sq m of pent-up tenant demand with a tightening vacancy rate of just 0.3 per cent.

“The successful Rosehill Central purchaser will be able to capitalise on the lack of competing stock in the market,” O’Neill said.

 “There is huge volume of enquiry for industrial and logistics space in Sydney’s central west, which has accelerated by 20 per cent due to rising e-commerce penetration.”

The site is being offered for sale in tandem with the state government’s $93-billion infrastructure spend in Western Sydney, which is creating improved connectivity with South Sydney.

Stage three of the Westconnex is scheduled for completion in 2023 and will deliver an estimated drive time saving of 40 minutes between the Western Sydney and South Sydney, and accelerate rental growth in the Central West.

Earlier this year, NSW planning minister Rob Stokes said that the former Shell Oil refinery and Sydney Business Park in Marsden would be fast-tracked and transformed into new business hubs under the state government’s plan to reset the economy after the Covid slump.

Combined, the new employment hubs would have the potential of creating 800 construction jobs and 700 ongoing jobs.

Rosehill Central also offers excellent labour availability, with a working population of 1.6 million within 30 minutes travel time.